TikTok Shop deemed-supplier VAT: who pays the VAT?

If you sell on TikTok Shop, the single question that trips most sellers up is deceptively simple: who hands the VAT to HMRC, you or TikTok?

The answer depends on where your stock sits and what it's worth. In a lot of cases the marketplace is treated as the seller for VAT, charges the VAT itself, and pays it over. In others, the VAT is entirely down to you.

Get this wrong and you'll either double-charge your customers or end up with an unexpected VAT bill plus penalties. This guide walks through the deemed-supplier rules, the £135 import rule, and exactly who is on the hook in each common scenario.

It's written for UK and overseas sellers using TikTok Shop, with current 2025/26 figures and the gov.uk rules cited throughout.

Who accounts for VAT on TikTok Shop sales? {#who-accounts-for-vat}

In two specific situations TikTok Shop is treated as the supplier and accounts for the VAT itself: low-value goods (£135 or less) sent from outside the UK, and goods of any value already in the UK that are sold by an overseas seller. In most other cases, including a UK-established business selling its own UK stock, you account for the VAT yourself.

That's the headline. The detail matters, so let's unpack each piece.

TikTok Shop is an "online marketplace" (OMP) for VAT purposes. HMRC treats a platform as an OMP where it sets the terms of the sale, is involved in authorising payment, and is involved in ordering or delivering the goods. TikTok Shop ticks all three boxes, so the OMP deemed-supplier rules apply to sales made through it.

What does "deemed supplier" actually mean? {#deemed-supplier}

"Deemed supplier" is HMRC's way of moving the VAT obligation off the small seller and onto the marketplace in the situations where it's hardest for HMRC to collect tax (typically from overseas sellers).

Where the rules bite, a single sale is split into two supplies for VAT:

• You (the seller) make a supply to the marketplace.
• The marketplace makes the supply to the final customer and charges the customer VAT.

When the goods were imported and are already in the UK at the point of sale, your supply to the marketplace is zero-rated. That's deliberate. It lets you, the overseas seller, reclaim the import VAT you paid when the stock first arrived, without charging VAT again on the onward supply to the platform. TikTok then charges the customer 20% UK VAT and pays that to HMRC.

So "deemed supplier" does not mean TikTok pays your import VAT or your income tax. It only shifts the output VAT on the sale to the UK customer. Everything else, including your own VAT registration where required, stays with you.

How does the £135 rule work for overseas goods? {#the-135-rule}

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Since 1 January 2021, the UK abolished low-value consignment relief and brought in a new system for goods imported in consignments worth £135 or less.

Here's the mechanism for sales through a marketplace like TikTok Shop:

• If the goods are outside the UK at the point of sale and the consignment is worth £135 or less, the marketplace must charge and account for UK supply VAT at the point of sale. There's no import VAT at the border on these consignments.
• If the consignment is worth more than £135, the special rule doesn't apply. Normal import VAT and customs rules kick in at the border instead.

The £135 figure is the intrinsic value of the whole consignment, not each item. Intrinsic value is the price the goods were sold for, excluding transport and insurance (unless they're bundled into the price and not shown separately) and excluding any other identifiable taxes and charges. It's measured at the point of sale.

A few important carve-outs. The £135 rule does not apply to consignments containing excise goods (alcohol, tobacco), to non-commercial gifts between private individuals, or to goods from Jersey and Guernsey covered by the Import VAT Accounting Scheme. Those follow their own rules.

For a business-to-business sale where the UK customer gives a valid UK VAT number, the marketplace doesn't charge VAT. The business customer accounts for it under the reverse charge instead.

What about goods already in the UK sold by an overseas seller? {#uk-located-goods}

This is the scenario that catches a lot of cross-border TikTok sellers using UK fulfilment.

If you're a business not established in the UK and you hold stock in a UK warehouse or fulfilment centre, then sell it through TikTok Shop, the marketplace is liable to account for the VAT on those sales, regardless of the value of the goods. There's no £135 ceiling here, because the goods are already in the UK.

The two-supply mechanism applies:

• You make a zero-rated deemed supply of the goods to TikTok.
• TikTok charges the customer 20% UK VAT and pays it to HMRC.

You still have your own obligations as a non-established taxable person (NETP). There's no VAT registration threshold for an NETP, so if you make taxable supplies in the UK you generally need to register from your first sale. Registering lets you reclaim the import VAT you paid when the goods entered the UK, under the normal input tax rules. If you only ever make zero-rated deemed supplies, you can either register for VAT or apply for exemption from registration, although registering is usually what allows the import VAT to be recovered.

What if you're a UK-established seller? {#uk-established-seller}

If your business is established in the UK and you're selling your own UK-held stock to UK customers through TikTok Shop, the deemed-supplier rules generally don't shift the VAT to the marketplace. You account for the VAT yourself, the same as any other UK sale.

That means you only charge VAT once you're VAT-registered. The UK VAT registration threshold for 2025/26 is £90,000 of taxable turnover in any rolling 12-month period (or if you expect to exceed it in the next 30 days). Below that, registration is voluntary.

Once you're registered, your TikTok Shop sales go on your own VAT return at the standard rate of 20%, and you keep digital records and file under Making Tax Digital for VAT like any other VAT-registered business.

If you're a creator monetising TikTok rather than running a goods shop, the VAT picture is different again, and our guide for TikTok creators covers how income, expenses and VAT work on the content side.

Worked examples: who pays what? {#worked-examples}

Illustrative example 1: low-value goods shipped from overseas.

Mei runs a small accessories business based outside the UK with no UK stock. A UK customer buys a phone case through TikTok Shop for £40. The case ships directly from overseas, and the consignment is worth £40, comfortably under £135.

Because the goods are outside the UK at the point of sale and the consignment is £135 or less, TikTok is the deemed supplier. TikTok charges the customer 20% VAT on the £40, so £8 of VAT, and pays that £8 to HMRC. Mei does not charge UK VAT on this sale herself. There's no import VAT at the border for this consignment.

Illustrative example 2: overseas seller using a UK warehouse.

Now Mei moves stock into a UK fulfilment centre to speed up delivery. A UK customer buys a £60 item that's already sitting in the UK warehouse.

The goods are in the UK at the point of sale and Mei is not UK-established, so TikTok is the deemed supplier regardless of value. TikTok charges the customer 20% VAT (£12) and pays it to HMRC. Mei's supply to TikTok is zero-rated. When the stock first arrived, say it had an intrinsic value of £30 and Mei paid £6 import VAT, she can reclaim that £6 as input tax on her UK VAT return, provided she's registered.

Illustrative example 3: UK-established seller, own UK stock.

Tom runs a UK limited company selling homeware on TikTok Shop from his own UK warehouse. His taxable turnover passed £90,000 last year, so he's VAT-registered.

The deemed-supplier rules don't shift the VAT to TikTok here. Tom sells a £60 item, accounts for £10 of VAT himself (£60 is VAT-inclusive, so £60 divided by 6 is £10 of VAT and £50 net), and reports it on his own VAT return.

A quick decision walkthrough {#decision-walkthrough}

Run your sale through these three questions to find who accounts for the VAT:

1. Where are the goods at the point of sale? If they're already in the UK, skip to question 3. If they're outside the UK, go to question 2.
2. Is the consignment worth £135 or less? If yes, TikTok charges and accounts for the VAT at the point of sale (unless it's a B2B sale and the buyer gives a UK VAT number). If it's over £135, normal import VAT and customs rules apply at the border.
3. Are you UK-established? If no (you're an overseas seller with UK stock), TikTok is the deemed supplier for any value. If yes, you account for the VAT yourself on your own VAT return.

This covers the standard cases. Excise goods, gifts and Channel Islands consignments sit outside these rules.

What about digital platform reporting (the data TikTok sends HMRC)? {#platform-reporting}

Separate from VAT, the UK now operates digital platform reporting rules (based on the OECD model rules). These require platforms like TikTok to report seller information to HMRC once a year.

The first reportable period ran from 1 January to 31 December 2024, with platforms required to report to HMRC and give each seller a copy of their data by 31 January 2025. After that it's an annual cycle.

There's a de minimis exclusion for very small sellers of goods: a seller who makes fewer than 30 sales of goods and receives 2,000 euros or less (around £1,700) in the year doesn't need to be reported. That exclusion is for goods only; it doesn't apply to services or property rentals.

Being reported is not a tax charge. It simply means HMRC sees the income, so your own VAT and income tax records need to line up with what TikTok reports.

Common mistakes we see {#common-mistakes}

In practice, the errors that cost sellers the most are predictable.

The first is an overseas seller assuming "the marketplace handles VAT" means they have no UK obligations at all. They still need to register as an NETP to reclaim import VAT and to handle anything that falls outside the deemed-supply rules.

The second is a UK-established seller assuming TikTok is charging the VAT for them, when it isn't, and never registering or never putting the sales on a return.

The third is treating the £135 threshold per item rather than per consignment, which gets the import VAT treatment wrong.

If any of that sounds like your setup, it's worth a proper review before HMRC does one for you. Want help working out who accounts for VAT on your TikTok Shop sales and getting your returns right? Book a call with a Zmartly accountant and we'll map it to your exact stock and selling model.

FAQs {#faqs}

Does TikTok Shop pay the VAT for me?

Only in specific cases. TikTok accounts for the VAT as the deemed supplier on low-value goods (£135 or less) shipped from outside the UK, and on goods of any value already in the UK sold by an overseas seller. If you're a UK-established business selling your own UK stock, you account for the VAT yourself.

What is the £135 VAT rule?

For goods imported in a consignment worth £135 or less and sold through a marketplace from outside the UK, UK supply VAT is charged at the point of sale by the marketplace rather than as import VAT at the border. The £135 is the intrinsic value of the whole consignment, not per item. Consignments over £135 follow normal import VAT and customs rules.

Do I need to register for UK VAT if I'm an overseas TikTok seller?

If you're not established in the UK and you make taxable supplies here, there's no registration threshold, so you generally need to register from your first sale. Registering lets you reclaim import VAT on stock you bring into the UK. If you only make zero-rated deemed supplies you can register or apply for exemption, but registering is usually what allows import VAT recovery.

When do UK-established TikTok sellers have to register for VAT?

When your taxable turnover exceeds the VAT registration threshold of £90,000 in any rolling 12-month period, or you expect to exceed it in the next 30 days, for 2025/26. Below that, registration is voluntary.

What VAT rate applies to TikTok Shop sales?

The UK standard rate of 20% applies to most goods. Some goods are reduced-rated at 5% or zero-rated, so the rate depends on what you sell, but the standard rate covers the large majority of TikTok Shop products.

Will HMRC be told about my TikTok Shop sales?

Yes, under the digital platform reporting rules, unless you fall under the de minimis exclusion of fewer than 30 sales of goods and 2,000 euros or less (around £1,700) in the year. TikTok reports seller data to HMRC annually and gives you a copy.

Sources {#sources}

• VAT and overseas goods sold to customers in the UK using online marketplaces — GOV.UK
• VAT and overseas goods sold directly to customers in the UK — GOV.UK
• VAT registration: when to register — GOV.UK
• VAT registration thresholds — GOV.UK
• VAT rates on different goods and services — GOV.UK
• How to fill in and submit your VAT Return (VAT Notice 700/12) — GOV.UK
• Reporting rules for digital platforms — GOV.UK
• Making Tax Digital for VAT — GOV.UK